Pennington v. Smith

| U.S. Circuit Court for the District of Southern New York | Jul 8, 1896

COXE, District Judge

(after stating the facts). This controversy has been presented in a manner so disjointed that the study heretofore expended is of little value in determining the present issue. The principle defense now relied on is not alleged in the answer and was not referred to at the former hearing. The court will, however, consider the new questions as if they were properly presented by the pleadings. It is understood that it is the wish of both parties that the cause shall be decided upon the merits, all technical objections being waived and the necessary amendments being considered as made. Approaching the cause in this spirit the one prominent consideration which overtops all others is the fact that the trust estate has already been more than paid the full amount due from the deceased trustee. With the sanction of the orphans’ court of Essex county, N. J., there was deposited with the Central Trust Company of New York the sum of $88,900 in trust for the benefit of the minor children of George Condit Smith. This was in 1890 and 1891. The balance of the Crossley bond and mortgage, $7,500, is also in the hands of the trustee for the benefit of the infants, making a total of $96,400. It further appears that the entire trust fund due the infants under the will of their mother, including both real and personál property, was $95,338.43. In other words, the trust estate has already received $1,061.57 more than it was entitled to receive under the will creating it. This being so it is hard to discover any principle of equity which will justify the court in taking $5,000 more from the estate of the deceased trustee and adding it to the fund of the infants. They were entitled to have $95,000 set aside for them under their mother’s will. There has been set aside for them $96,000. What more can they ask? What more does equity demand? The fact that the beneficiaries happen to be the children of the deceased trustee in no way alters the legal aspect of the case. The law should be administered as if he had acted as trustee for the children of a total stranger. When it appears that he has invested for the benefit of his wards every dollar to which they are entitled should the court be astute in seeking to discover some theory by which $5,000 can be taken from his widow and added to the already overpaid trust estate? It is thought not. Not only is the fact of overpayment fully proved, but it also appears that Mr. Smith supposed that his additions to the infants’ personal property would reduce pro tanto their interest in the real estate. This is proved by his statement to Mr. Conant and his letter of August, 1893, in which he says of the Crossley mortgage, “It is a good security. The children practically have no interest in it after I deduct what I have already deposited to their credit in the Central Trust Company.” It is perfectly plain that Mr. Smith did not intend to present the trust estate with these “overpayments.” He fully expected to be allowed for them in some form.

But it is argued that he became so involved in a net of his own construction that it was impossible for him to reach forth his hand to take what was his due and his estate is in exactly the same plight. It is said: First. That his act in charging the “overpayments” to himself was final and cannot be undone. Second. That subsequent to the deeds of trust to the Central Trust Company he acknowledged that the infants’ share in the Orossley mortgage was $13,356 and his executrix is now estopped from asserting to the contrary. Third. That the $3,000 deposited in the defendant bank was the proceeds of the sale of New Jersey real estate and must still be considered real estate in legal contempla! ion to be dealt with only by the court ordering the sale. That in the absence of an express order it cannot be used to exonerate the personal fund. Fourth. That whatever rights the executrix has in the premises must he enforced against the personal estate by reopening the account, or otherwise. These and other objections which have been urged are plausible, but they hardly touch the merits. It is thought that they must fail in the presence of ihe overwhelming aud hardly disputed fact that the trust has even now more than it is strictly entitled to. The suggestion that the money deposited in tire New York bank is New Jersey real estate would seem to be an ingenious legal fiction which need hardly dissuade a court of equity from doing what it deems to be justice between the parties. This is not a question of nomenclature but of practical common sense. Let it be once conceded that the trust fuud has $5,000 to which it is not entitled and it can make no possible difference whether the trustee’s estate is reimbursed from funds in the Fifth Avenue Bank or in the Central Trust Company. The complainant seems hardly to deny that the situation is one where the defendant Smith is entitled to relief but it is contended that she cannot obtain it in this action. Tt is probably true that after long aud expensive litigation she could have redress of some sort in the courts of New Jersey, but why turn her opt of this court? This is a court of equity having jurisdiction of the parties and control of the fund. The infants are fully represented and every fact bearing upon the controversy has, presumably, been adduced. Why compel the parties to seek another tribunal for a decision which can as well he rendered here? When they have almost reached the goal why turn them back to begin the arduous journey anew? It is, perhaps, unnecessary to repeat what “was said at the argument as to the character of this litigation further than to say that the fact that the real parties in interest are infants should induce the court to terminate 1he dispute with as little delay and expense as possible. It follows that the bill must be dismissed but, as the defendant permitted the action to proceed until it had reached the master before proving the defense wliich has now succeeded, she should pay costs to the complainant.